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The Use of Coal is Increasing

The use of coal for power generation has declined in the United States as coal-fired power plants have been closed before the end of their useful economic lives.

While regulations and preference based dispatching have caused this decline in the United States, the use of coal for power generation is growing elsewhere around the world, especially in South East Asia.

A Woods McKenzie expert at the Singapore International Energy Week said:

“Coal is still the most affordable technology in power generation.”

The International Energy Agency (IEA) has projected that the use of coal will increase in India, Indonesia and Vietnam.

The IEA said that around 100,000 MW of new coal-fired power plants will come on line in South East Asia by 2040, and that Indonesia will account for 40% of this increase.

The German environmental group, Ungewald, has said that 1,600 new coal-fired power plants are being built around the world, and that Chinese companies are scheduled to build around 700 of these plants.

These plants are likely to be far more efficient than plants built in the past, and be high energy low emission (HELE) plants using ultra-supercritical designs.

Only one HELE plant has been built in the United States, which went on line before the current war on coal. It is the John W. Turk plant in Arkansas.

In the United States, the Energy Information Administration has forecast that coal usage will grow in 2018, with coal and natural gas providing about equal amounts of electricity: Coal 31% and Natural gas 32%.

While the war on coal in the United States has taken its toll, with the closure of over 250 coal-fired power plants, and a resulting increase in what people pay for their electricity, the price of natural gas will likely rise to where coal will be competitive. Fuel switching will be discouraged and coal-fired power plants will be competitive with natural gas power plants when the price of natural gas is between $3.00 and $3.50 per million BTU.

Over the past few years, the price of natural gas has been below $3.00, actually below $2.50 per million BTU during 2016, which has put considerable pressure on both coal-fired and nuclear power pants to compete … especially with the effect of preferential dispatching used by RTO/ISO organizations. See Controversial Fuel-Secure Rule.

Millions of people in South East Asia lack electricity.

Satellite view of India at night.

Coal is the least expensive way to bring electricity to the millions of people who now lack it. Not only is coal inexpensive, but it doesn’t require specialized methods of transportation to bring it to power plants: Trucks and railroads can transport coal over existing roads or tracks.

Natural gas, however, requires a large investment in pipelines and LNG import terminals, especially where power plants are located inland from coastal areas.

India and especially Indonesia have large supplies of coal.

In India and Indonesia the average person consumes around 800 kWh/year.

Other countries in the area, such as the Philippines, Vietnam and Thailand all have fairly low per capita consumption of electricity. (Source World Bank, 2014 data.)

People in developed countries, such as the United States, where the average person consumes nearly 13,000 kWh/year, use far larger amounts of electricity than do people in these poorer countries.

For people in these poorer countries, coal is their ticket to a modern lifestyle: Why should any other country try to deprive them of that lifestyle.

I agree, it’s very difficult, especially when the media, in general, either doesn’t understand what they write about or they have an agenda that precludes the use of the most efficient methods for using energy.

While I appreciate much of the article’s content and its conclusions, I find this paragraph to be both inadequate and inaccurate:

“While the war on coal in the United States has taken its toll, with the closure of over 250 coal-fired power plants, and a resulting increase in what people pay for their electricity, the price of natural gas will likely rise to where coal will be competitive. Fuel switching will be discouraged and coal-fired power plants will be competitive with natural gas power plants when the price of natural gas is between $3.00 and $3.50 per million BTU.”

The insinuation that coal closures is a leading or even significant cause of higher rates in the US is very suspect. Many factors at many levels play a role in rates and it is dubious to say closing coal units is a prime mover when such closings have not put any LMP node at risk of falling short of reserve margin requirements nor led to significant increases in inefficient peakers setting the clearing price. There is also no distinction made in the article between coal plants by unit age, LCOE or between new builds and existing infrastructure.

Sure, FEFC wants to maintain a balance between coal, gas and nuclear, and with hydro and pumped hydro storage capacity in the mix where it makes sense. and wholesale energy markets already organize the correct merit orders, but the system’s uniform clearing price auction has been infiltrated by zero-fuel-cost sources that also happen to offer almost no capacity to the system. That exposesa serious market flaw that has scant been addressed to date (PJMs capacity compliance rule being an exception, albeit only a small step in the right direction for proper capacity valuation.

Great comments.
The closure of coal-fired power plants leads to higher costs to consumers for electricity since existing coal-fired power plants generate electricity for around 3 cents per kWh while wind and solar, that replaces the coal-fired electricity, costs more than that.
No matter how large the effect, the price will increase. Replacing a low cost source with a higher cost source will result in higher prices to consumers.
If new coal-fired power plants were allowed to be built, their LCOEs would still be lower than the LCOEs for wind and solar.
Closure of coal-fired power plants hasn’t affected reserve margins since new capacity from new natural gas plants is also being built. Wind and solar supposedly add to the reserves, but using wind and solar for determining reserves is wrong since they aren’t dispatchable.
You began to address the real issue when you mentioned zero cost fuel and the auctions based on marginal costs. Please see my article The Market for Electricity is Rigged.
I don’t think we are in real disagreement, except perhaps on the size of the effect that closing coal-fired power plants has on consumer electricity prices.